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Japan’s factories chugging along. Industrial output has been rising for the last four months, and that trend is likely to continue. The Bank of Japan will also release its monthly economic report for July, a day after it said the economy was recovering for the first time in 2.5 years.

The US and European Union reached a deal to regulate derivatives. Regulators will jointly supervise derivatives traders in their territories. The agreement gives participants in the $630 trillion market more flexibility and allows banks to escape some of the stricter regulations enforced after the financial crisis.

The US and China to start investment treaty negotiations. The bilateral treaty could facilitate more protections and market access for US investors in China. The last round of talks held in 2008 was inconclusive.

Gwynn Guilford on how China’s banks continued to lend despite the central bank’s directions: “The ‘Big Four’ state-owned banks—China Construction Bank, Industrial and Commerical Bank of China, Bank of China and Agricultural Bank of China—lent a combined $27.7 billion in the first week of July (link in Chinese), reported the Shanghai Seucrities News (SSN). That’s compared with $44 billion for all of June. Some $35.4 billion of that was lent out in the first ten days of June, before rates hit prohibitive heights.” Read more here.

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